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Danner Company expects to have a cash balance of $54,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $102,000, February $180,000. Payments for direct materials: January $60,000, February $90,000. Direct labor: January $36,000, February $54,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $25,200, February $30,000. These costs include depreciation of $1,800 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $18,000, February $24,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $14,400 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $30,000. The company wants to maintain a minimum monthly cash balance of $24,000. Prepare a cash budget for January and February.

Danner Company expects to have a cash balance of $54,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $102,000, February $180,000. Payments for direct materials: January $60,000, February $90,000. Direct labor: January $36,000, February $54,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $25,200, February $30,000. These costs include depreciation of $1,800 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $18,000, February $24,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $14,400 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $30,000. The company wants to maintain a minimum monthly cash balance of $24,000. Prepare a cash budget for January and February.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Cash Budget for Danner Company Danner Company projects a starting cash balance of $54,000 as of January 1, 2020. The following are the anticipated monthly budget details for January and February 2020. #### Cash Receipts - **Collections from Customers:** - January: $102,000 - February: $180,000 #### Cash Disbursements - **Payments for Direct Materials:** - January: $60,000 - February: $90,000 - **Direct Labor:** - January: $36,000 - February: $54,000 - **Note:** Wages are paid in the month they are incurred. - **Manufacturing Overhead:** - January: $25,200 - February: $30,000 - **Note:** These costs include depreciation of $1,800 per month. All other overhead costs are paid as incurred. - **Selling and Administrative Expenses:** - January: $18,000 - February: $24,000 - **Note:** These costs are exclusive of depreciation. They are paid as incurred. #### Additional Financial Information - **Sales of Marketable Securities (January):** $14,400 - **Line of Credit:** Danner Company has access to a line of credit from a local bank enabling it to borrow up to $30,000. - **Minimum Monthly Cash Balance Requirement:** $24,000 ### Required Task - **Objective:** Prepare a cash budget for January and February. Please ensure all cash inflows and outflows are properly accounted for to maintain the minimum required monthly cash balance of $24,000. For further understanding, create the cash budget table to include: - Beginning cash balance - Add: Cash collections - Total cash available - Less: Cash disbursements - Ending cash balance before borrowing - Borrowing (if necessary) - Ending cash balance after borrowing
Transcribed Image Text:### Cash Budget for Danner Company Danner Company projects a starting cash balance of $54,000 as of January 1, 2020. The following are the anticipated monthly budget details for January and February 2020. #### Cash Receipts - **Collections from Customers:** - January: $102,000 - February: $180,000 #### Cash Disbursements - **Payments for Direct Materials:** - January: $60,000 - February: $90,000 - **Direct Labor:** - January: $36,000 - February: $54,000 - **Note:** Wages are paid in the month they are incurred. - **Manufacturing Overhead:** - January: $25,200 - February: $30,000 - **Note:** These costs include depreciation of $1,800 per month. All other overhead costs are paid as incurred. - **Selling and Administrative Expenses:** - January: $18,000 - February: $24,000 - **Note:** These costs are exclusive of depreciation. They are paid as incurred. #### Additional Financial Information - **Sales of Marketable Securities (January):** $14,400 - **Line of Credit:** Danner Company has access to a line of credit from a local bank enabling it to borrow up to $30,000. - **Minimum Monthly Cash Balance Requirement:** $24,000 ### Required Task - **Objective:** Prepare a cash budget for January and February. Please ensure all cash inflows and outflows are properly accounted for to maintain the minimum required monthly cash balance of $24,000. For further understanding, create the cash budget table to include: - Beginning cash balance - Add: Cash collections - Total cash available - Less: Cash disbursements - Ending cash balance before borrowing - Borrowing (if necessary) - Ending cash balance after borrowing
### Cash Budget Template for Danner Company The following template is designed to help Danner Company create a cash budget for the upcoming months. This template comprises various input fields and dropdown lists to systematically organize anticipated cash inflows and outflows. The structure allows for data entry for both January and February, ensuring ease of tracking and comparison. #### Template Overview **Header:** - **Company Title:** DANNER COMPANY - **Section Title:** Cash Budget **Budgeting Table:** | | January | February | |---|---------|----------| | **Line Items** | $ [Input Field] | $ [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | **Description:** This table is arranged to facilitate the documentation of financial figures, with separate columns dedicated to the months of January and February. Each dropdown list corresponds to different categories of cash inflows and outflows which users can select. Adjacent to each category selection, there are input fields where respective monetary values are to be entered. Users should populate the fields accurately to maintain an effective and reliable cash budget. **Graphical Guidance:** - **Dropdown List:** This feature allows users to select predefined categories for their cash transactions. - **Input Fields:** Blank spaces are provided next to each dropdown list for users to enter relevant cash amounts for each category. This template is a crucial tool for financial planning, enabling the company to anticipate its cash needs and make informed decisions. Users must ensure accurate data entry to reflect the company's financial situation as closely as possible.
Transcribed Image Text:### Cash Budget Template for Danner Company The following template is designed to help Danner Company create a cash budget for the upcoming months. This template comprises various input fields and dropdown lists to systematically organize anticipated cash inflows and outflows. The structure allows for data entry for both January and February, ensuring ease of tracking and comparison. #### Template Overview **Header:** - **Company Title:** DANNER COMPANY - **Section Title:** Cash Budget **Budgeting Table:** | | January | February | |---|---------|----------| | **Line Items** | $ [Input Field] | $ [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | | [Dropdown List] | [Input Field] | [Input Field] | **Description:** This table is arranged to facilitate the documentation of financial figures, with separate columns dedicated to the months of January and February. Each dropdown list corresponds to different categories of cash inflows and outflows which users can select. Adjacent to each category selection, there are input fields where respective monetary values are to be entered. Users should populate the fields accurately to maintain an effective and reliable cash budget. **Graphical Guidance:** - **Dropdown List:** This feature allows users to select predefined categories for their cash transactions. - **Input Fields:** Blank spaces are provided next to each dropdown list for users to enter relevant cash amounts for each category. This template is a crucial tool for financial planning, enabling the company to anticipate its cash needs and make informed decisions. Users must ensure accurate data entry to reflect the company's financial situation as closely as possible.
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